We welcome the report and recommendations from the Transition Finance Market Review (TFMR).
This is an important area and we’re encouraged to see a significant number of firms across the economy start to set out plans for how they will decarbonise.
Meeting the UK’s net zero target will require a significant increase in transition capital, and we recognise the challenges and complexities for firms in structuring this kind of finance. Delivering this change will also create opportunities for long-term investment in the UK economy.
Transition finance remains a priority for us and we acknowledge the TFMR’s call for more communication on how we view its role within our wider work and regulation.
Our objective is to support the market to scale with integrity, with the right standards and guardrails to help build trust. To ensure we can achieve this, we will:
- consider the transition to net zero within our policymaking and supervisory functions, including how best to embed the TFMR’s findings
- work with the Government on a new regime for ESG ratings providers[3], to further support integrity in transition-related ratings
- build on the productive engagement we’ve had with the TFMR, industry participants and international bodies to progress transition finance, including through the Climate Financial Risk Forum[4]
- monitor market practices and raise standards, for example by consulting on strengthening our disclosure expectations, pending the Government’s endorsement of the ISSB standards[5]
- support firms through more guidance and best practice, such as our review of the sustainability-linked loans market[6]
We also recognise concerns some have raised to the TFMR about being accused of greenwashing when making claims about future decarbonisation. Our guidance for the anti-greenwashing rule[7] gives more information about our approach, including on transition-related claims.
We encourage firms to read the TFMR’s recommendations[2] and we are keen to hear from firms as we undertake further work on this issue.
Email us at [email protected].